ACC 202 Final Exam - Questions and Answers

ACC 202 Final Exam - Questions and Answers ABC systems create ________. A) one large cost pool B) homogeneous activity-related cost pools C) activity-cost pools with a broad focus D) activity-cost pools containing many direct costs Activity based costing system differs from traditional costing systems in the treatment of ________. A) direct labor costs B) direct material costs C) prime costs D) indirect costs The fundamental cost objects of ABC are ________. A) activities B) cost drivers C) products D) services Which of the following statements about ABC is not true? A) A byproduct of ABC implementation can improve the efficiency of operations B) ABC should be implemented solely by the accountants as they are the guardians of the accounting information system C) ABC may empower employees to also implement cost saving projects D) Although implementation of ABC can be a refinement of a cost system, it has its limitations Which of the following statements is true of ABC systems? A) ABC system will always result in higher product costs. B) ABC system employs multiple activity-cost drivers. C) ABC system is least suited for service companies. D) ABC system is simpler compared to traditional systems. ABC and traditional systems are quite similar in ________. A) the treatment of direct costs B) the allocation of overheads C) evaluating performance D) the identification of cost pools An activity-based costing system that is designed for internal decision-making will not conform to generally accepted accounting principles because: A) under activity-based costing some manufacturing costs (i.e., the costs of idle capacity and organization-sustaining costs) will not be assigned to products. B) under activity-based costing the sum of all product costs does not equal the total costs of the company. C) activity-based costing has not been approved by the United Nation's International Accounting Board. D) activity-based costing results in less accurate costs than more traditional costing methods based on direct labor-hours or machine-hours. Which of the following would be classified as a product- level activity? A) Setting up a machine for a batch of a standard product. B) Operating a cafeteria for employees. C) Running the Human Resource department. D) Advertising a product. In activity-based costing, the activity rate for an activity cost pool is computed by dividing the total overhead cost in the activity cost pool by: A) the direct labor-hours required by the product. B) the machine-hours required by the product. C) the total activity for the activity cost pool. D) the total direct labor-hours for the activity cost pool. When switching from a traditional costing system to an activity-based costing system that contains some batch-level costs: A) the unit product costs of both high and low volume products typically increase. B) the unit product costs of both high and low volume products typically decrease. C) the unit product costs of high volume products typically increase and the unit product costs of low volume products typically decrease. D) the unit product costs of high volume products typically decrease and the unit product costs of low volume products typically increase. The preparation of all the budgets in the master budget forces managers to think about their business operations and to formulate plans, while: A) detecting inaccurate historical records to avoid errors in budgets B) setting expectations against which actual results can be compared C) completing the budgeting tasks with minimal cross functional feedback D) ignoring financial risks and opportunities A budget is an end product of negotiations among senior and subordinate mangers because ________. A) budgeting is their mutual responsibility B) senior managers alone cannot spare the time required for the budgeting process C) senior managers are responsible for providing information on competitors' performance and subordinate managers are responsible for information on external market conditions D) senior managers want very challenging targets, while subordinates may want targets that are relatively easier to achieve. Which of the following is referred to as the bottom-up aspect of the budgeting process? A) lower-level managers setting their individual targets that aggregate to be the company-wide target B) senior managers consulting middle- and lower-level managers to investigate any deviations from the budget C) lower-level managers implementing the budgets with senior managers monitoring progress and investigating deviations D) lower-level managers providing inputs to the budgeting process based on their specialized knowledge and familiarity of the operation To reduce budgetary slack management may ________. A) incorporate stretch or challenge targets B) use external benchmark performance measures C) award bonuses for achieving budgeted amounts D) reduce projected cost targets by 10% across all areas Managers who feel that top management does not believe in the budget are most likely to ________. A) pick up the slack and participate in the budgeting B) to face little interference in the day-to-day aspects of running the business C) be less engaged participants in the budgeting process and less committed to achieving budgeted targets D) convert the budget to a shorter more reasonable time period that will help with real time reporting Budgets should ________.